Answers to queries on Vivad Se Vishwas Scheme

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The Union Honourable Finance Minister, Mrs Nirmala Sitharaman during her budget speech on February 1, 2020 (2020) 420 ITR 115 (St) (146) proposed to introduce a scheme at para 126 of the speech for settlement of disputes. Subsequently, the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act) was introduced. The Scheme was extended from time to time and the last date for payment under the VSV Act, 2020 extended until October 31, 2021 by CBDT, vide Notification No. 75 of 2021 dated June 25, 2021 (2021) 435 ITR (St) 25. The said scheme has benefited the taxpayers to reduce the tax litigation. When the scheme was introduced the research team of the itatonline.org had anticipated that the taxpayers may require a number of clarifications. Itatonline.org had requested the panel of experts consisting of Dr. K. Shivaram Senior Advocate, CA Rajan Vora and CA Pradeep Kapasi to answer queries arising on Vivad Se Viswas Schme to assist the tax consultants and tax payers. The expert panel started answering the queries raised by the tax consultants on February 28, 2020 and till date the expert panel have answered more than 750 questions only on the Direct Tax Vivad Se Viswas Act, 2020. From May 15, 2021 on words the itatonline.org has introduced the new section on “Ask your questions” which answers questions regularly. It is proposed that this new panel will answer the questions pertaining to Direct Tax Vivad Se Viswas Act, 2020.
See also Vivad Se Vishwas Scheme: The Law, Procedure And Dilemma where a link to all necessary resources is given

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The answers given below are in response to queries asked by other people.
Query

The ao added back to our income transactions they considered as hawala. They then deducted the full tax and penalty and interest there on against a refund we had owing to us.

We appealed against the hawala decision. Matter has not been heard as of date.

How do we deal with this matter under the vsv scheme. Thanks

Answer Assessee can file the declaration ,however the assessee  has to pay the  tax in dispute . If the tax is paid , there will not be interest and penalty ,    the assessee  will get  the refund of the interest and penalty .   (read more)
Query

Can order by the Hon’ble ITAT be considered as FAVOURABLE order as addition @ 8%/100% is reduced to 3 % which is less than 5% (for which VSV is being opted).

Will answer be different if parties for which addition is made differs, but the addition is under purchases from Bhanwarlal Jain Group
Answer As we understand, in a case if CIT adds 100 rupees, and subsequently the ITAT reduces it by 50 percent i.e. 50 rupees. It is a favourable order to the extent of 50 percent. Therefore, the assessee should be allowed to avail the scheme by settling the dispute at tax payable on 25 percent addition… (read more)
Query

Respected Sir,
I have already paid the Tax and the interest imposed on me but my appeal is pending with ITAT for hearing. If I decide to op[t for thios scheme would the dept refund the Interest which they imposed on the amount of Tax.
Answer Yes, As per explanation to section 7 of VSVA, where the declarant had, before filing the declaration paid any amount under the Income-tax Act in respect of his tax arrears which exceeds the amount payable under section 3 of VSVA, he shall be entitled to a refund of such excess amount, but shall not be… (read more)
Query

As per the provisions of section 246A(1)(a) of the Income-tax Act, an intimation under section 143(1) of the Income-tax Act is an order appealable before the Commissioner of Appeals [CIT(A)].

There are taxpayers who have filed an appeal before the CIT(A) against an intimation under section 143(1) and now wish to settle the same under the VsV Scheme.

In the online Form 1, at Part B – ‘Information Relating to Dispute’, there is a mandatory field titled, ‘Section under which order passed (there could be multiple sections for same assessment year)’. The said field of the functionality requires selection of the relevant section under which the order is passed (and the appeal is filed against) from a dropdown list of pre-specified sections. However, ‘section 143(1)’ is not listed under the said dropdown.

In absence of ‘section 143(1)’ in the dropdown, the taxpayers intending to settle the appeal filed against intimation under section 143(1) are unable to fill in the Form 1.

Can the Form 1 be amended to include Section 143(1) ot what is the way forward regarding this?
Answer Yes, your understanding is correct, an appeal can be filed against an Order under section 143(1) of the Act. Further, there is no reason as to why an order under section 143(1) of the Act should be excluded from the scope of VSVA. It is advisable to approach the designated authority under VSVA to seek… (read more)
Query

Sir,
Our case was pending with CIT-A. We have received Form 3, now we have to file Form 4 as per form 3 we have refund.
In form 4 there is a compulsory question to fill in details of Challan and withdrawal proof.
1)The question is if there is a refund than what shall be filed in Challan details and
2) what shall be proof of withdrawal to be attached?
Answer As we understand, there is no need to fill challan details in the event of a refund, and when the appeal is pending before the CIT(A) the same is deemed to have been withdrawn, therefore there is no question of filing a proof of withdrawal. In case there is a problem in submitting the form… (read more)
Query

Due to an error in Form 1 of VSV, instead of amount refundable to the assessee, the form shows amount payable by the assessee. Can the same be rectified by filing another Form 1 ? How many times the same can be refiled?Currently the status under VSV scheme is “Awaiting Form 3 from CIT”.
Please suggest.
Answer The assessee can once again file under VSVA and this time chose the filing type as “revised” for the same AY.   (read more)
Query

In the facts of the given case, on the disputed issue (viz. Disallowance of Employees Contribution to PF & ESIC) in an earlier year viz.A.Y.2010-11, the Appeal of the assessee was allowed by the CIT(Appeals). Against the same, the Department went into appeal before the ITAT. The ITAT dismissed the appeal of the Department on the ground of low tax effect viz. monetary limits. In subsequent year viz. A.Y.2012-13, disallowance on the same issue was made by the A.O. The assessee has preferred an appeal before the CIT(Appeals) which was pending on the ‘specified date’. Now, the assessee wants to opt for the DTVSV Scheme. What would be the quantum of ‘disputed tax’ – 100% or 50% since, considering the fact that Appeal of the Department on ‘disputed issue’ was dismissed by ITAT (in view of 2nd Proviso to Section 3 of DTVSV Act)??
Answer The proviso reads as under “ Provided further that in a case where an appeal is filed before the Commissioner (Appeals) or objections is filed before the Dispute Resolution Panel by the appellant on any issue on which he has already got a decision in his favour from the Income Tax Appellate Tribunal (where the… (read more)
Query

In case of search assessment u/s 143(3) passed earlier with addition made of Rs 20,00,000/-. appeal filed and pending. Subsequently their was search and the relevant assessment year also falls in the Block. Assessment U/s 153A/143(3) passed on the same addition of Rs 20,00,000/-. If we file for VSV what will be the tax rate applicable 100% or 125% on the above income which was earlier assessed U/.s 143(3) and same repeate again in 153A.
Answer We presume that there was search earlier and the assessment was finalised under section  143(3) of the Act and the appeal is pending . Mean time one more search and seizure action  was initiated and the order was passed u/s 153A , read with section 143(3) of the Act.  One the relevant assessment is covered… (read more)
Query

ITAT order received on 29/12/2019. We have not filed any appeal before high court yet.can we still go for vivad se vishwas scheme even though there is delay in filing appeal before high court.
Answer The assessee is eligible for VSVA.  He has to settle the appeal which is pending against the order under section 263 of the Act. Once the order under section 263 is settled , consequential order passed by the AO  giving effect to the order of under section 263 , which is pending before the CIT(A) will not  survive… (read more)
Query

VSVS query?

A sold land at 5 Cr, claimed 1 Cr expense on removing encroachment and Rs.1 cr transfer/improvement cost. AO disallowed 1 Cr expense but allowed 1 Cr improvement cost.

A challenged 1 Cr addition. citA allowed full relief in Apr 2020.

Later on CIT passed 263 directing AO to disallow Rs.1 cr cost of improvement. Order u/s 143(3) r.w.s 263 passed disallowing 1 cr improvement cost.

A challenged order 263 before ITAT and order u/s 143(3) res 263 before citA.

If A wish to avail VSVS then what ld be tax demand?
Will it be against addition of rs 1 cr or 2 Cr (1 cr allowed +1 Cr pending appeal)?

Ay is same. Two different appeal filed. Both were pending as on 31.01.2020.
Answer The assessee is eligible for VSVA.  He has to settle the appeal which is pending against the order under section 263 of the Act. Once the order under section 263 is settled , consequential order passed by the AO  giving effect to the order of under section 263 , which is pending before the CIT(A) will not  survive… (read more)